diff --git a/suite/browser/navigator.xul b/suite/browser/navigator.xul
index d33f5343434f..46d7b4f1a59b 100644
--- a/suite/browser/navigator.xul
+++ b/suite/browser/navigator.xul
@@ -262,7 +262,7 @@ Contributor(s): ______________________________________. -->
                         type="rdf:http://www.w3.org/1999/02/22-rdf-syntax-ns#type"
                         label="rdf:http://home.netscape.com/NC-rdf#Name"
                         ondraggesture="event.preventBubble(); return false;">
-              <menupopup ondraggesture="nsDragAndDrop.startDrag(event, homeButtonObserver);"/>
+              <menupopup ondraggesture="nsDragAndDrop.startDrag(event, personalToolbarObserver);"/>
             </menubutton>
           </rule>
 
diff --git a/suite/browser/navigatorDD.js b/suite/browser/navigatorDD.js
index ad980f4bdf7c..3825c8b9d2aa 100644
--- a/suite/browser/navigatorDD.js
+++ b/suite/browser/navigatorDD.js
@@ -79,7 +79,21 @@ var personalToolbarObserver = {
       // there. 
       if (navigator.platform != "Win32" && aEvent.target.localName != "button")
         return;
-        
+
+
+      if (aEvent.target.localName == "menu" || aEvent.target.localName == "menubutton") {                                 
+        if (aEvent.target.getAttribute("type") == "http://home.netscape.com/NC-rdf#Folder") {
+          var child = aEvent.target.childNodes[0];                               
+          if (child && child.localName == "menupopup")                                     
+            child.closePopup();                                                  
+          else {                                                                 
+            var parent = aEvent.target.parentNode;                               
+            if (parent && parent.localName == "menupopup")                                 
+            parent.closePopup();                                               
+          }                                                                      
+        }
+      }                                                                         
+
       var personalToolbar = document.getElementById("PersonalToolbar");
       if (aEvent.target == personalToolbar) return;
 
@@ -209,12 +223,7 @@ var personalToolbarObserver = {
 
   onDragOver: function (aEvent, aFlavour, aDragSession)
     {
-      var dropPosition
-      if (aEvent.target.getAttribute("type") == "http://home.netscape.com/NC-rdf#Folder"
-          && aEvent.target.getAttribute("container") == "true")
-        dropPosition = this.DROP_ON;
-      else
-        dropPosition = this.determineDropPosition(aEvent);
+       var dropPosition = this.determineDropPosition(aEvent);
 
       // bail if drop target is not a valid bookmark item or folder
       var inner = document.getElementById("innermostBox");
@@ -280,7 +289,7 @@ var personalToolbarObserver = {
       // you can drop ONTO containers, so there is a "middle" region
       if (overButton.getAttribute("container") == "true" &&
           overButton.getAttribute("type") == "http://home.netscape.com/NC-rdf#Folder")
-        regionCount = 3;
+         return this.DROP_ON;
 
       var regionWidth = overButtonBoxObject.width/regionCount;
 
@@ -316,6 +325,8 @@ var personalToolbarObserver = {
           case "menu":
           case "menuitem":
             var menu = aElement.parentNode.parentNode;
+            if (menu.getAttribute("type") != "http://home.netscape.com/NC-rdf#Folder")
+              return RDFUtils.getResource("NC:BookmarksRoot");
             return RDFUtils.getResource(menu.id);
           case "treecell":
             var treeitem = aElement.parentNode.parentNode.parentNode.parentNode;